An image of a mobile device at the Taiwan Semiconductor Manufacturing (TSMC) Innovation Museum in Hsinchu, Tuesday, January 11, 2022.
Chen Yihua | Bloomberg | Getty Images
Asian tech stocks fell on Friday following an overnight selloff on Wall Street, sending the tech-heavy Nasdaq Composite Index into correction territory as renewed concerns about artificial intelligence spending rattled investor sentiment.
South Korean chipmaker SK Hynix fell more than 8%, while Samsung Electronics fell 7%. Selling pressure spread across the country’s technology sector, with LG Innotek and LG Display falling 10% and 7.7%, respectively.
The selloff came as investors feared that Democrats’ landslide victory in the U.S. midterm elections could lead to tighter restrictions on data center development, slowing demand for AI chips and related infrastructure.
In Japan, semiconductor-related stocks, including chip testing equipment manufacturers, fell. Advantest While plummeting 12.2%, Tokyo Electron It fell 7.3%. Major technology investment Softbank Group It fell 11.6%.
Memory chip manufacturer stocks Kioxia Holdings Although it fell by nearly 10%, Renesas Electronics It decreased by 7.5%.
In Taiwan, contracts with semiconductor manufacturing companies also put significant selling pressure on semiconductor stocks. TSMC Down 9.6%. electronics manufacturer Hon Hai Precision IndustryFoxconn Technology and Foxconn Technologies, also known as Foxconn, fell 9.4% and 9.1%, respectively, as the regional tech rout deepened.
China was also caught up in the regional stock market decline, with the tech-heavy STAR market and ChiNext artificial intelligence index both down more than 4%.
The decline followed a tough session on Wall Street, where the Nasdaq Composite Index fell 5.5% amid growing concerns about the sustainability of the AI investment boom and the returns from massive data center spending. It closed more than 10% below its recent high. The Philadelphia Semiconductor Stock Index fell 12.2%.
Timothy Mo, chief Asia-Pacific equity strategist at Goldman Sachs, told CNBC’s “Squawk Box Asia” on Friday that the decline in Asian stocks was exacerbated by investors unwinding positions, selling stop losses and increasing volatility.
He added that potential political opposition to US data center construction could impact demand and profits for AI hardware suppliers in Asia.
“If there are concerns about the speed and scale of economic growth in the United States, then obviously all of that is going to be called into question,” he said. “The market trend has always been to attack first and ask questions later, and I think that’s exactly what’s happening right now.”
